Provident Fund Notification for International Workers

58 years age limit, for withdrawal of Provident Fund contribution, diluted for IWs covered under SSAs

The Ministry of Labour and Employment (“MLE”) by way of notification[1]  has further amended the Employees Provident Fund Scheme, 1952 (“EPFS”) and Employees Pension Scheme, 1995 (“EPS”) in respect of International Workers (“IWs”).

Background

In October 2008, the MLE made fundamental changes in EPFS and EPS.  The ambit of both the schemes was broadened to compulsorily cover IWs under the purview of India’s social security regime.

In September, 2010, the MLE issued a notification further amending the EPFS and EPS and stringent rules for withdrawal of Provident Fund (“PF”) accumulations were introduced for IWs.   As per the concerned amendment, the IWs were eligible to claim the PF accumulation on retirement from service, only after the attaining age of 58 years.  However, for IWs covered under any Social Security Agreement (“SSA”), beneficial withdrawal provisions would apply as specified in the applicable SSA.

MLE has, through a recent notification, further relaxed the withdrawal provisions for IWs covered under SSAs.  The notification is effective from October 05, 2012.

Key amendments in PF Scheme

(I)         IWs covered under an SSA can withdraw their accumulated PF balance on ceasing to be an employee of an establishment covered under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952.

(II)      The PF accumulations will be paid to the IWs either directly in their bank account or indirectly through their employer.  In other words, the IWs covered under an SSA, would not be required to maintain a bank account after the completion of their assignment for receipt of the funds, since the PF accumulations can also be paid into the bank account of the employer.

Key amendments in Pension Scheme

(I)       In the case of an IW covered by an SSA, for determining the eligibility for pension, his period of coverage under relevant social security programme of home country shall be added to his actual service in India, as per the terms of the SSA. This amendment is clarificatory in nature